Tomahawk, WI 04/23/2014 (Basicsmedia) – Yahoo! Inc. (NASDAQ:YHOO) is one of the pioneers of the Age of Internet that has now been overshadowed by competitors including Google Inc (NASDAQ:GOOG) and Facebook Inc (NASDAQ:FB). In the search ad and display ad market, Google has left Yahoo behind. Similarly, in mobile advertising Facebook has left Google and Yahoo behind.

The Yahoo search engine has become a minor player in the search engine space as Google continues to be all-conquering in the search business — as even Microsoft Corporation (NASDAQ:MSFT) has discovered to its chagrin at great cost to its bottom-line in terms of the billions sunk into R&D to develop Bing.

Yahoo’s Business

Yahoo’s 1Q2014 revenue increased by 1.8% compared to 1Q2013 to reach $1.09 billion while its earnings were flat at $0.38 per share in 1Q2014.  Display ads brought in $409 million for Yahoo in 1Q2014 reflecting a growth of 2% compared to the previous quarter. This was the first quarter in which display ad revenues grew since 2Q2012. Search revenue also increased in 1Q2014 by 9% compared to 1Q2013. Search contributed 41% to Yahoo’s revenues in 1Q2014 compared to 38% in 1Q2013.

Number of paid clicks grew by 6% for Yahoo and the price per click also increased by 8% in 1Q2014. However, in 1Q2013, paid clicks had grown by 17% while price per click had declined by 4%. Display ads too increased by 7% beating both 1Q2013 and 4Q2013. Price per ad declined by 5% compared to a decline of 7% in 4Q2013.

Will Alibaba Stake Do The Trick?

Yahoo’s 24% stake in Alibaba may be worth around $36 to $48 billion if Alibaba is to be valued at $152 to $200 billion. The pending IPO will clarify the picture.

Yahoo on Mobile

Yahoo! Inc. (NASDAQ:YHOO) must transition to mobiles as quickly as possible. To be fair to Yahoo though, even Google was unable to anticipate how swiftly users will switch to smartphones. Only Facebook is making good money from selling mobile ads.

Now, Yahoo is reportedly in talks with Apple to make Yahoo the default search engine in iOS and the Safari browser.

Strong in Content

On the content side, Yahoo! Inc. (NASDAQ:YHOO) is planning to make TV shows like HBO’s popular Game of Thrones and Netflix’s House of Cards. Yahoo has also signed up Katie Couric, Matt Bai and David Pogue in recent months. It remains to be seen whether these moves will be sufficient to turn the tide for Yahoo.

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